- I. New Technology, Outdated Laws
- II. Why the First Sale Doctrine Excludes Digital Media
- III. Blockchain Basics
- IV. New Technology Ushers in New Possibilities
- V. Conclusion
The blockchain is part of the history of the Internet. It is at the same level as the World Wide Web in terms of importance, and arguably might give us back the Internet, in the way it was supposed to be: more decentralized, more open, more secure, more private, more equitable, and more accessible.
I. New Technology, Outdated Laws
Consider this scenario: A videogame player goes to a game store and buys the latest release. Then, he plays for several weeks, defeating the boss and finishing the game. Then, he takes the completed game and sells it back to the store. This process of purchasing a good, enjoying it, and then selling it secondhand epitomizes the gamer’s first sale doctrine right. Resales represented a billion-dollar industry for GameStop alone in 2009. However, more recently, games are being bought digitally and downloaded onto a console or computer. In fact, 83% of games bought in 2018 were digital versions instead of physical ones. What happens when a gamer buys a digital copy of the game online instead of a physical copy? Unfortunately for the gamer, the first sale doctrine does not apply to digitally purchased games.
As technology has taken over our world, digital media has become pervasive and easily accessible for purchase or even for free. In fact, the average teenager can find just about any piece of media for free on the internet. While the ease and accessibility of content is a big boon for the internet, courts and legislatures have struggled with creating and applying established law to the internet specifically and technology in general. One such area is the resale of digital media, to which the court found in Capitol Records, LLC v. ReDigi Inc. (ReDigi) that the first sale doctrine does not apply.
However, technology has advanced since the court first heard the ReDigi case almost a decade ago, and blockchain technology may be the thing that allows a digital first sale doctrine to exist. Blockchain has the possibility of revolutionizing many areas, including the financial industry, supply chains, sale of luxury goods, healthcare, and much more. It has even been described as the technology that will advance us into the “Fourth Industrial Revolution.” More importantly, in relation to copyright law, blockchain can affect the management of intellectual property rights, specifically digital works like music, art, videogames, and movies.
This Comment analyzes how blockchain may be the technology that brings about a digital first sale doctrine. Part II outlines the evolution of the Copyright Act, the first sale doctrine, ReDigi, and the Digital Millennium Copyright Act (DMCA). Part III details blockchain technology, NFTs, smart contracts, and why we need a digital first sale doctrine. Part IV examines how blockchain may provide the means to create a digital first sale doctrine even after the court’s decision in ReDigi.
II. Why the First Sale Doctrine Excludes Digital Media
A. From Common Law to Copyright Law
Copyright law gives copyright owners exclusive rights, including the right to distribute. However, the first sale doctrine, codified at 17 U.S.C. § 109(a), limits these rights. The first sale doctrine allows the buyer of a lawfully purchased copyrighted work to sell or transfer the work to a third party without authorization of the copyright holder while avoiding any copyright violations. The first sale doctrine was not always codified, and the concept initially arose out of Bobbs-Merill Co. v. Straus. This case considered whether a copyright owner could prevent the sale of a book after the initial purchase; in this case, the book was The Castaway by Hallie Erminie Rives. The Supreme Court held that a copyright owner’s right to prevent sales exhausts after the first sale to a purchaser.
Thanks to the first sale doctrine, secondary markets are able to exist because the original copyright owners do not have the power to prevent subsequent sales. It allows works such as books, records, compact discs (CDs), and digital video discs (DVDs) to be given away, resold, and donated. Though, currently, the power of the first sale doctrine is only established with respect to physical works. The problem with digital works is that every transfer leads to a new copy of the work on the recipient’s device. Even if the original copy is deleted after the transfer, a new copy was still made on the recipient’s device, and that violates the reproduction rights of the copyright holder. Because digital works are so easily created and reproduced, no form of a digital first sale doctrine has been recognized in the United States.
B. The Controlling Case’s Conclusion
ReDigi, one of the few cases discussing a digital first sale doctrine, is the “last word on the subject” and seemingly upholds the DMCA Section 104 Report. This section will detail the district court case, the appellate case, and why the court denied a digital first sale doctrine.
1. ReDigi: The District Court
Capitol Records, LLC (Capitol), brought an action against ReDigi Inc. (ReDigi), a website operator that “markets itself as ‘the world’s first and only online marketplace for digital used music.’” Capitol alleged ReDigi’s services amounted to a copyright infringement claim in violation of the Copyright Act of 1976.
ReDigi provided their customers with a service that allowed the resale of digital music files legally obtained from Apple iTunes. To sell a music file through ReDigi, a user was required to download the software Media Manager. Media Manager determined if the file was legally purchased, detected any remaining copies stored on the user’s device, and deleted or prompted deletion of the remaining copies. Additionally, the software made sure the two copies of the music file—the one from the seller’s device and the one on the purchaser’s device—never existed simultaneously.
Here, the court had to determine if the unauthorized transfer of a digital file via the internet creates a reproduction that would violate the Copyright Act. The district court concluded it did. Additionally, the court determined that the distribution rights of Capitol were infringed by ReDigi, excluding any affirmative defense. The court denied any fair use or first sale affirmative defenses, stating it is “impossible for the user to sell her ‘particular’” copy of the digital file as it is illegally reproduced when transferred to ReDigi’s servers and from there, illegally distributed to other users. The court also mentioned its “consistent deference to Congress when major technological innovations alter the market for copyrighted materials.” Because Congress has the constitutional power to apply the first sale doctrine to digital goods, yet has declined to do so, the court had no choice but to decline to as well.
2. ReDigi: The Appellate Court
Unsatisfied with the district court’s decision, ReDigi appealed. ReDigi invented a system in good faith aimed at creating a lawful marketplace for “used” digital music. The company took several precautions to avoid getting in trouble with copyright law. ReDigi tried to conceive the theoretical “forward-and-delete” type mechanism that the DMCA Section 104 Report hypothesized may one day exist. Despite ReDigi’s good faith efforts, the court disagreed that the company’s technology created such a system.
Most detrimental to ReDigi’s argument was that the digital music file was copied during the process. The Copyright Act enables copyright holders the exclusive right to reproduce the copyrighted material. As the lower court explained in ReDigi, the reproduction right is the “exclusive right to embody, and to prevent others from embodying, the copyrighted work (or sound recording) in a new material object (or phonorecord).” In order to fall within the protection of the first sale doctrine, the copyrighted work cannot be reproduced, only redistributed. ReDigi tried to argue that its system simultaneously deleted the files from the customer’s computer and copied the files onto its servers. The digital files were being removed from the original device, the customer’s hard drive, then sent to ReDigi’s servers or to another user’s hard drive. However, the court disagreed, stating that each time a transfer of this nature occurs, the copyrighted work confined in the digital file is being reproduced. Essentially, ReDigi’s system created a copy (in the legal sense) when a reproduction of the file was made, and because the reproduction was not authorized by the copyright holder, the copyright holder’s rights were violated. In other words, the purchaser of a digital song owns the copy that was created when downloading the song but selling that song to someone else produces a new unlawful copy that is being fixed inside a new physical object, e.g., a hard drive or server.
The court also doubted ReDigi’s claim that all duplicates could realistically be destroyed. It observed that a user could retain duplicates of their digital music file even after selling it via ReDigi’s services. The company had users download Music Manager, a software program, which ensured the file was legally obtained and scanned it for signs of tampering. During and after the transfer, the software would continue to scan the computer and connected devices for any duplicates. Upon finding a duplicate, it will prompt the user to delete the duplicate or face suspension of their account. However, the company admitted that the program is not wholly foolproof, considering users could get around the Music Manager software and maintain their illegal duplicate. For example, a user could still save the file off their device on an external hard drive or in the cloud and then restore the file after resale. Ultimately, the court described a process that is analogous to the double-spending problem, where the user illegally sells the copy while also maintaining a duplicate.
Along with the double-spending problem, the court also had a fungibility concern with digital media. The court noted that digital media does not slowly break down over time like physical media does. When digital files are accessed, they “do not deteriorate the way printed books and physical records deteriorate,” thus creating more competition with secondhand markets. For example, a CD can only be listened to so many times before it no longer plays, but a digital song can be played indefinitely, or at least as long as Spotify hosts the song. Because “used” digital files do not deteriorate, a buyer of digital media has no incentive to pay full price for an unused file, unlike a buyer of a physical media. Thus, any secondary market for digital media sold at a lower price would harm the primary market. Additionally, physical books are limited by the burden of housing and transporting the physical copy. Meanwhile, digital content does not degrade, is easily reproducible, easily transferable, and easily housed. These features can cause a couple of problems. First, there is an increased piracy threat. Second, the digital copies can compete in the secondhand market far greater than their physical counterparts can. All these factors combined show how digital media is not currently a complete proxy for physical media.
While the Copyright Act also gives copyright holders distribution rights over their protected works, an affirmative defense, the first sale doctrine, creates a limit on the exclusive distribution right. The first sale doctrine does not allow a copyright holder to retain distribution rights over an individual copy. Yet not even the first sale doctrine could provide an affirmative defense for ReDigi. The process of transferring digital music files to another physical object during a secondhand sale constitutes an unlawful reproduction, thus the first sale doctrine does not apply.
This is not to say that the court completely shut down a secondary market for digital goods, but it puts forward an inconvenient and unwieldy way of doing it. The court explained that a consumer could resell the device (i.e., a computer or iPod) that their digital music was legally purchased and downloaded on. Or, to be more cost-effective, the consumer could compile “50 or 100 (or more) songs” on a hard drive and sell it. This method is protected by the first sale doctrine because there is no copy of the music file being created and transferred to another person’s device. The court concluded that while it does not have to determine if all digital files transferred over the internet make reproductions, ReDigi’s system did. Though ReDigi—a lawsuit originally from January 2012—was not able to provide the kind of system or technology that both the court and the Copyright Office theorized, the case illustrated that a digital first sale doctrine is not unattainable.
Ultimately, upon hearing the arguments, the circuit court agreed with the district court that ReDigi’s current system and services infringed on Capitol’s exclusive right to reproduce copyrighted works. Several amicus briefs in ReDigi argued that a digital first sale doctrine should be recognized in order to adapt to the digital age. They argued that if we want to ensure the existence of libraries and secondary markets such as bookstores and record stores in the digital age, then a digital first sale doctrine must exist. However, the appeals court rejected this argument and left any further development of a digital first sale doctrine to Congress.
C. U.S. Copyright Office and the Omission of Digital Media
In response to copyright law struggling to keep pace with modern technology, Congress enacted the Digital Millennium Copyright Act (DMCA) in 1998. “Physical copies of works in a digital format, such as CDs or DVDs, are subject to section 109 in the same way as physical copies of works in analog form.” Unfortunately, the options that the DMCA provides for a theoretical digital first sale doctrine eliminate any practical means of use. In 2001, Congress’s official advisor on copyright issues, the U.S. Copyright Office, published an opinion discussing a digital first sale doctrine. In this report, the Copyright Office considered whether a “forward-and-delete” mechanism, which destroys a digital file on your device upon sending that file to someone else, could support a digital first sale doctrine. The Copyright Office explained that it was too early to say how the doctrine should be formed and instead recommended a “wait and see” approach:
[U]nless a “forward-and-delete” technology is employed to automatically delete the sender’s copy, the deletion of a work requires an additional affirmative act on the part of the sender subsequent to the transmission. This act is difficult to prove or disprove, as is a person’s claim to have transmitted only a single copy, thereby raising complex evidentiary concerns. There were conflicting views on whether effective forward and delete technologies exist today. Even if they do, it is not clear that the market will bear the cost of an expensive technological measure.
Ultimately, while the report acknowledged that its reading of section 109 could be seen as “unduly formalistic,” it concluded that section 109 does not apply to digital transmission of works. When this report was written, digital rights management technologies “were still largely distributed on physical media such as DVDs and CDs, which could be freely transferred.” Since then, technology has dramatically evolved, and the market for digital media has greatly increased, yet Congress has not spoken to this issue since 2001. For example, one recent advancement in technology is the development of decentralized ledgers that can be used to store and transmit information. This technology underpins the use of blockchain and Bitcoin and has been used to record ownership.
III. Blockchain Basics
The underlying principle that became blockchain technology was first introduced by Satoshi Nakamato, the creator of the cryptocurrency bitcoin, in 2008. He published a white paper that put forth a “purely peer-to-peer version of electronic cash” used for online payments without needing a trusted intermediary. “Blockchain is a shared, immutable ledger” that is publicly accessible and transparent. Each set of transactions is recorded as a “block” of data that connects to the prior transactions, creating a chain. “Every block is hashed, which creates a unique ‘fingerprint’ from the block’s information.” What makes blockchain technology different from other ledgers is that it does not exist on a single system but, instead, is decentralized. Being decentralized allows blockchain to exist across networks, providing valid copies to every participant of the blockchain. A decentralized system is particularly helpful for creating a system with very accurate and tamperproof records. This is due to the fact that blockchain, as a decentralized system, is not tied to a single storage site nor does it exist in a single location.
Blockchain’s importance and use has only grown since the idea was first released in Nakamato’s white paper. Now, there are approximately one million users who transact with cryptocurrencies every day, and over 100 million cryptocurrency wallets exist. A cryptocurrency is a digital asset that is transacted using a blockchain. Rather than being backed by a government, cryptocurrencies are backed by their respective blockchain networks. A crypto wallet does not hold your cryptocurrency like a physical wallet would hold your money. Instead, a crypto wallet holds the private digital keys that give you access to your cryptocurrencies.
With the latest evolution in blockchain technology, things like Non-Fungible Tokens (NFTs) and smart contracts are filling niches in the digital marketplace. The following sections of this part will delve into each of these developments, first exploring NFTs, their current use and trajectory, and then introduce smart contracts and their present applications.
A. What Is an NFT?
An NFT is a unique digital asset that represents goods like “art, music, in-game items, and videos.” NFTs give the owner not only the right to claim ownership over the digital good(s) tied to the NFT but also the right to exclude others from claiming ownership:
NFTs by their very nature are unique and non-fungible—when one purchases an NFT, they do not buy the file containing the digital artwork tied to the NFT, but rather the token itself. In theory, the NFT owner can resell what was first sold—the NFT—without having to make any unauthorized reproductions.
NFTs have furnished artists and content providers a unique means to monetize their media, and some truly unique things have been monetized. For example, the Nyan Cat GIF was sold for $600,000, and Jack Dorsey’s first tweet on Twitter sold for $3 million. Although some current uses of NFTs involve selling classic memes and tweets, the technology that acts as a foundation for NFTs can be applied to any digital good transacted using the blockchain.
One application where NFTs could change the field is in real estate. Hypothetically, an owner could create an NFT representing a property deed and sell said deed on the blockchain, providing a less complicated and costly way of transferring ownership. Another example would be transferring ownership of digital textbooks once a student completes a class. Others argue that luxury brands and fashion will be the next industries to enter the NFT realm, utilizing the technology as a way to authenticate products. Or that NFTs will be used for events and ticketing, synchronizing all of the components of an event on one NFT. Most importantly for this Comment, NFTs are predicted to provide an alternate means of licensing for digital music besides Spotify, Apple Music, and YouTube Music.
B. What Is a Smart Contract?
Associated with every NFT are smart contracts that determine how the digital asset interacts with the blockchain and its users. A smart contract is computer code that can automatically execute or implement the contractual terms defined within the code. Despite the name, smart contracts are not really contracts but code designed to run on if-then statements. Upon meeting the conditions listed in the smart contract, the assets transfer instantaneously and automatically. For example, if the products are delivered on time, then the funds will be immediately released to the seller. NFTs can be embedded in smart contracts, meaning that the smart contract will transfer an NFT within it based on the rules defined in the smart contract. Conversely, smart contracts can be embedded in NFTs, which can allow a user to call and access assets, such as music, that are embedded in an NFT.
Smart contracts that define access to an NFT could underpin a viable digital first sale doctrine. NFTs and smart contracts are opening the door to new possibilities for copyright holders to capitalize on the digital market realm. Such blockchain-based solutions provide a potential key to ensuring resale rights to individual purchasers as well as resale royalties to the copyright holder.
IV. New Technology Ushers in New Possibilities
The last development regarding a digital first sale doctrine occurred in ReDigi, in which the district court refused to apply digital goods to the first sale doctrine. The courts’ refusal to interpret the first sale doctrine, which was originally common law before being codified, without clarification from Congress is odd. Especially considering that the court in ReDigi should have applied the concept of media neutrality, “which encourages courts to broadly construe copyright laws in order to compensate for the frequent advancements in technology.” Media neutrality is the theory that regardless of whether the media exists in digital form or physical form, a copyright owner’s rights remain identical. Yet, this is not the case with digital goods, considering that the first sale doctrine does not apply to digital goods. Nevertheless, technology has continued to progress and evolve quickly. With the advent of blockchain and NFTs, the possibility of a digital first sale doctrine must be reexamined.
First, Section IV.A will show how blockchain technology has evolved since the technology presented to the court in ReDigi, thereby eliminating three major concerns. Next, Section IV.B will analyze what a digital first sale doctrine might look like applied. Then, Section IV.C will answer why we need a digital first sale doctrine. Lastly, Section IV.D will provide some incentives for copyright holders to move towards a blockchain system.
A. Blockchain Technology as a Solution
Blockchain could be the exact kind of technology the Second Circuit predicted could come to exist. The several legal obstructions to creating a first sale doctrine put forth in ReDigi are: (1) the inability to sell a copy without violating the reproduction rights; (2) the double-spending and fungibility concerns; and (3) the inability to sell a copy without violating the distribution rights.
First and foremost, blockchain may provide the answer to the court’s concern with reproduction rights. An NFT stored on the blockchain could contain a smart contract that contains an access key to a digital media file. The access keys, hypothetically, would be made by the copyright holder and provide access to their copyrighted material. Theoretically, these keys can be bought, sold, and transferred in secondary markets without any reproduction of the copyrighted digital media occurring.
Furthermore, blockchain has the capacity to solve the “double-spending” problem. Double-spending is the idea that something digital can be transferred while concurrently retaining the original. This is a bigger problem with digital goods because compared to physical goods, digital ones are considerably easier to reproduce. Double-spending often refers to digital money in particular but is theoretically applicable to all digital information. Blockchain technology can solve the double-spending problem by ensuring digital assets are transferred between users. Both the DMCA Report and the Second Circuit in ReDigi were concerned with “forward and delete” technologies at the time, because there was no way to detect or prevent individuals from maintaining duplicates after a transfer. Yet, blockchain technology has already provided a solution to the double-spending problem in relation to digital money and digital assets. The decentralized nature of blockchain ledgers means that any attempt to double-spend an asset would be overruled by the many other blockchain ledgers and the consensus-forming protocol at the heart of blockchain technology.
Additionally, NFTs provide a workaround for the court’s worry about the fungibility of digital goods. One of the great benefits of an NFT is that it is nonfungible, giving the individual ownership over a specific instance of the media rather than a nonexclusive right or a license to access the media. Digital songs are fungible objects, in which each copy downloaded is identical to the next. Conversely, NFTs are nonfungible, closer to a physical CD, and, most importantly, resalable. For example, if a buyer purchases an eBook copy of A Tale of Two Cities, they likely receive a nonexclusive license to the book rather than legally owning a specific copy. Furthermore, that copy is identical to every other eBook version of A Tale of Two Cities. Alternatively, an NFT copy of this book would possess a unique hash that distinguishes it from every other NFT copy, which theoretically proves ownership on the blockchain.
An issue occurs if NFTs are considered digital codes that provide access to digital copies of movies. In Redbox Automated Retail, LLC v. Buena Vista Home Entertainment, Inc., the court found that the first sale doctrine was inapplicable to digital codes. However, this becomes a nonissue considering smart contracts control all transactions and usage of NFTs. When generating an NFT, the developer, in this case the copyright holder, can authorize the resale of the NFT. This is done in the smart contract and would be up to the discretion of the copyright holder to sanction. Additionally, if the copyright holder authorizes the resale, then there is not likely to be a challenge to the work being resold. The power of smart contracts extends far beyond just allowing transactions, and copyright holders can even determine royalties to be paid upon each resale of the media.
B. What Would a Digital First Sale Doctrine Look Like?
Some digital media, such as music and art, might greatly benefit from a digital first sale doctrine. Several music artists and companies are already utilizing blockchain technology to change the way that music is bought, sold, and consumed. One such artist, RAC, created 100 limited-edition cassette tapes, and people could buy and sell the NFTs that represented the physical product. If the purchaser wished to use their NFT, they would receive the cassette in the mail and the quantity in circulation would drop from 100 to 99. The starting price was $20, and just a couple of months later, the value jumped to $4,800, making it the “most expensive cassette tape in history.”
Another one of the most employed mediums utilizing blockchain technology so far is digital art. Currently, there are blockchain platforms that allow artists to register their art, such as Verisart, OpenSea, and most recently in July 2022, GameStop. These kinds of companies use blockchain technology and NFTs to buy, sell, trade, create, and verify the authenticity of digital artwork. This technology is so groundbreaking because digital artists can finally create an exclusive, nonfungible version of their work as well as limit the number of copies created. These platforms allow digital artists to register the copyright for their work, creating “digital uniqueness and scarcity.”
Additionally, blockchain technology has become more pervasive in connection with video games. The gaming sector is massive, reaching a global revenue of $143 billion in 2020. One facet of this lucrative market involves players selling their profiles or accounts to willing buyers. The difficulty lies in trading, selling, and buying the profile securely. However, blockchain can provide a secure platform by which profiles can be transacted between parties. Furthermore, blockchain technology has allowed individuals to buy, sell, and trade in-game items, such as weapons or characters. These marketplaces, which utilize blockchain technology, show that there is a commercial need for a digital first sale doctrine.
C. Why Do We Need a Digital First Sale Doctrine?
How we buy things and on what platform has dramatically shifted from even twenty years ago. As technology advances, the way we interact with the world changes, and the laws must change accordingly. For example, when was the last time you bought a CD? Or a digital song? With the rise of streaming, interest in music files has sharply declined. Streaming services do not pay out to artists as much as one would expect. Spotify, for example, pays out $0.006 to $0.0084 per stream, meaning for every one million streams, an artist can expect only about $6,000 to $8,400. Then, the proceeds must be split with crew members, producers, and the record company, leaving the artist with even less. However, musicians would be able to receive a more reasonable profit if they utilized blockchain technology. A digital first sale doctrine may provide a solution to this problem.
Moreover, the library community has raised concerns with how digital books will affect libraries. For example, most publishers will not even sell their e-books to libraries and often e-books are much more expensive than printed books. “Libraries are still in the early days of distributed digital media.” However, the pandemic has rapidly increased the usage of digital content by libraries. After the lockdown started in March 2020, roughly 74% of libraries have reported expanding their digital content, such as e-books. Yet, lending licensing for e-books is very pricey, in part because they have expiration dates. A digital first sale doctrine may provide a solution for libraries.
The gaming industry could benefit from a digital first sale doctrine. Some companies, like GameStop, already have a game trade-in program and a secondhand market for physical games. Implementing a digital secondhand market could prove profitable for a company like GameStop which currently has a physical secondhand market. Other companies like Valve, a video game developer that mostly sells digital video games on Steam, could enter the secondhand gaming market. Offering a digital secondhand market is a natural progression for companies like Valve because they already exist in the digital marketspace. With digital video games more and more in demand, both types of companies, those already with secondhand markets and those that already sell digital goods, could benefit from a legal digital first sale doctrine.
D. Incentive for Copyright Holders to Upload to the Blockchain
Currently, copyright holders have a complete monopoly over their digital goods. When a digital song is purchased, most of the revenue goes to the copyright holder. Putting their digital goods on the blockchain could limit some of the copyright holder’s power over their goods. So, why would a copyright holder want to allow customers to purchase their work at a discount on a secondhand marketplace, when the used goods will always be as pristine as a new copy? Primarily because the creator of a good is not necessarily the copyright holder. To illustrate, in music, profits are normally split between the artist, record label, and many other third parties. NFTs could offer artists a larger fraction of the revenue and incentivize them to sell their content on the blockchain.
One benefit is that royalties can be paid out very quickly over the blockchain, when compared to the time it takes with a streaming service. Sending someone payments through an Automated Clearing House, commonly referred to as ACH, must take place during business hours, whereas Bitcoin payment apps, such as BitPay, will pay out at any time of the day. In extreme cases, it has even taken months to pay artists. Additionally, blockchain could help break down the various sources where the artist’s money comes from, such as “merch, touring, licensing, streaming royalties, and performance royalties.” Blockchain technology can give artists more control over their work and ensure that they are being fairly compensated.
Smart contracts in particular give artists more control over their digital creations. Blockchain technology would allow the copyright holder to specifically set the prices and uses for each work in a myriad of combinations. Holders could allow a song meant for private use to be cheaper than a song meant for commercial use. The blockchain could provide a means to limit the numbers of copies the artist wishes to make available to the market. Additionally, copyright owners can take a cut of the revenue generated by any of their works on the blockchain. Because smart contracts control the parameters of an NFT, the copyright holder could demand whatever royalty percentage they wish of any digital work being sold or resold. This may incentivize copyright holders to put their works on the blockchain since they could automatically receive a cut of the sale price for any resold goods. Smart contracts also allow for dynamic pricing, meaning the smart contract can automatically raise the price of the good it is attached to during high-demand periods.
When the DMCA was written, most copyrighted material was physically manifested. Roughly two decades later, much of the copyrighted material that exists is incorporeal and lives on computers, smartphones, and in the cloud. The current challenge involves creating avenues that treat digital media in the same fashion as physical media.
In ReDigi, district court refused the adoption of a first sale doctrine when Congress had not yet done so. The court found that ReDigi’s services violated the copyright holder’s reproduction rights, distribution rights, and did not guarantee that the copies were being deleted. Furthermore, with Congress’s continual silence, the possibility of a digital first sale doctrine feels hardly attainable. Yet, new technologies have changed the playing field in the decade since ReDigi was decided. Now, with blockchain technology and NFTs, there seems to be hope for a digital first sale doctrine. NFTs provide a solution to the reproduction right violations, the distribution right violations, and the double-spending problem. As we see the progression of new technology and the ingenious ways companies use them, perhaps the courts will note the merits of a digital first sale doctrine in the next case on this issue. The alternative is to wait for legislative amendments.
William Mougayar, The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology, at xvi (2016).
Yukari Iwatani Kane & Miguel Bustillo, Used Games Score Big for GameStop, Wall St. J. (Jan. 21, 2009, 12:01 AM), https://www.wsj.com/articles/SB123249378212700025 [https://perma.cc/ML9P-ST86]. For more on the changes in the secondhand games market in the past decade, see Sunita Thapa, This Is the Past, Present and Future of the Second Hand Games Market; Are Your Days Numbered?, Technoeager, https://technoeager.com/this-is-the-past-present-and-future-of-the-second-hand-games-market-are-your-days-numbered/ [https://perma.cc/6VBV-9GCT] (last visited Sept. 29, 2022).
J. Clement, Digital and Physical Game Sales in the U.S. 2009–2018, by Format, Statista (May 17, 2022), https://www.statista.com/statistics/190225/digital-and-physical-game-sales-in-the-us-since-2009/ [https://perma.cc/DQ69-FWP6] (“This is a dramatic turnaround from less than a decade earlier, when 80 percent of video games were sold as physical copies.”).
See infra Part IV.
See Ashley Johnson, 22 Years After the DMCA, Online Piracy Is Still a Widespread Problem, ITIF (Feb. 7, 2020), https://itif.org/publications/2020/02/07/22-years-after-dmca-online-piracy-still-widespread-problem [https://perma.cc/4NNA-R3B9] (showing that “34 percent of 16- to 24-year-olds admitted” were using illegal stream ripping).
Capitol Records, LLC v. ReDigi Inc., 910 F.3d 649, 664 (2d Cir. 2018).
Phillip Shaverdian, Blockchain-Based Digital Assets and the Case for Revisiting Copyright’s First Sale Doctrine, UCLA L. Rev. (Feb. 19, 2019), https://www.uclalawreview.org/blockchain-based-digital-assets-and-the-case-for-revisiting-copyrights-first-sale-doctrine-2/ [https://perma.cc/9E5B-LUQK].
See Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, Bitcoin.Org, https://bitcoin.org/bitcoin.pdf [https://perma.cc/K84W-YWEG] (last visited Sept. 29, 2022) (proposing cryptocurrency, and the underlying technology that led to blockchain, as an alternative to traditional banking); Darryn Pollock, The Future Of Banking: Is It All Bitcoin and Blockchain?, Forbes (July 25, 2019, 5:42 AM), https://www.forbes.com/sites/darrynpollock/2019/07/25/the-future-of-banking-is-it-all-bitcoin-and-blockchain/?sh=388e5dc131eb [https://perma.cc/QN7Z-F865] (explaining that cryptocurrencies have the potential to revolutionize the banking industry).
Michael Corkery & Nathaniel Popper, From Farm to Blockchain: Walmart Tracks Its Lettuce, N.Y. Times (Sept. 24, 2018), https://www.nytimes.com/2018/09/24/business/walmart-blockchain-lettuce.html [https://perma.cc/DCW7-SBTH] (detailing Walmart’s plan to implement a blockchain-backed system for supply chain monitoring of produce for things like foodborne illness outbreaks); Aaron Ricadela, Blockchain Records Are Forever in Opaque Diamond Market, Forbes (July 12, 2019, 5:00 AM), https://www.forbes.com/sites/oracle/2019/07/12/blockchain-records-are-forever-in-opaque-diamond-market/?sh=42e312dd270b [https://perma.cc/9MPB-2FVV] (sharing the development of blockchain-backed companies that monitor the supply chain of diamonds to fight fraud and source diamonds).
See LVMH Partners with Other Major Luxury Companies on Aura, the First Global Luxury Blockchain, LVMH (Apr. 20, 2021), https://www.lvmh.com/news-documents/news/lvmh-partners-with-other-major-luxury-companies-on-aura-the-first-global-luxury-blockchain/ [https://perma.cc/VRF2-MRY4] (detailing how brands such as Louis Vuitton, Prada, Richemont, and more have partnered with Aura Blockchain, which enables customers to access the entire history of a product in an attempt to increase authenticity, sustainability, and responsible sourcing); Blockchain in Retail Fashion & Luxury, ConsenSys, https://consensys.net/blockchain-use-cases/retail-fashion-and-luxury/ [https://perma.cc/89LF-H9VU] (last visited Nov. 14, 2021) (providing services that promote “transparency, traceability, and tradability in retail fashion and luxury supply chain[s]”).
Sara Castellanos, A Cryptocurrency Technology Finds New Use Tackling Coronavirus, Wall St. J. (Apr. 23, 2020, 5:06 PM), https://www.wsj.com/articles/a-cryptocurrency-technology-finds-new-use-tackling-coronavirus-11587675966 [https://perma.cc/8BX3-S9NL] (reporting that companies were using blockchain technology to help employers, government, etc. to keep track of people with immunity to the Covid-19 virus).
See, e.g., Mo Mozuch, Blockchain Games Twist the Fundamentals of Online Gaming, Inverse (Apr. 29, 2021, 8:01 AM), https://www.inverse.com/gaming/blockchain-games-online-gaming [https://perma.cc/DPY6-TJ5S] (explaining how video games incorporate cryptographic blockchain technology to monetize the in-game experiences and items, such as “weapons, skins, experience points,” or even accounts).
Blockchain: How the Fourth Industrial Revolution Can Help Accelerate Progress Towards Development, World Bank (Feb. 7, 2019), https://www.worldbank.org/en/news/feature/2019/01/24/blockchain-como-asegurarse-que-cadadolar-llegue-a-quien-lo-necesita [https://perma.cc/4ZR8-J6YC].
Michèle Finck, Copyright Law on Blockchains: Between New Forms of Rights Administration and Digital Rights Management 2.0, 50 Int’l Rev. Intell. Prop. & Competition L. 77, 80 (2018).
See infra Part II.
See infra Part III.
See infra Part IV.
Justin Hughes, The Philosophy of Intellectual Property, 77 Geo. L.J. 287, 295 (1988) (“Even without such debates, intellectual property—like all property—remains an amorphous bundle of rights.”). There are six exclusive rights including: reproduction, preparation of derivative works, distribution, public performance, public display, and digital transmission performance. 17 U.S.C. § 106.
17 U.S.C. § 109.
17 U.S.C. § 109(a) (“[T]he owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”).
Bobbs-Merrill Co. v. Straus, 210 U.S. 339, 350–51 (1908). The first sale doctrine was also known as the rule of exhaustion. John T. Soma & Michael K. Kugler, Why Rent When You Can Own? How ReDigi, Apple, and Amazon Will Use the Cloud and the Digital First Sale Doctrine to Resell Music, E-Books, Games, and Movies, 15 N.C. J.L. & Tech. 425, 428 (2014).
Straus, 210 U.S. at 341.
Id. at 350 (“There is no claim in this case of contract limitation, nor license agreement controlling the subsequent sales of the book.”).
2 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 8.12[B] (2013).
Aaron Perzanowski & Jason Schultz, Digital Exhaustion, 58 UCLA L. Rev. 889, 903 (2011).
Capitol Records, LLC v. ReDigi Inc., 910 F.3d 649, 659 (2d Cir. 2018).
Sebastian Pech, Copyright Unchained: How Blockchain Technology Can Change the Administration and Distribution of Copyright Protected Works, 14 Nw. J. Tech. & Intell. Prop. 1, 41 (2020).
ReDigi, 910 F.3d at 659.
Id. However, other countries have begun incorporating a digital first sale doctrine. Martin Beacham, Can You Exhaust a Digital Video Game Copyright?, JD Supra (Apr. 15, 2020), https://www.jdsupra.com/legalnews/can-you-exhaust-a-digital-video-game-56942/ [https://perma.cc/F69B-VFGS]. A French high court ruled against Valve, stating consumers are legally allowed to resell digital games bought on the Steam digital storefront, just like consumers can do with physical games. Tribunal de grande instance [TGI] [ordinary court of original jurisdiction] Paris, Sept. 17, 2019, 16/01008, Doctrine (Fr), https://www.doctrine.fr/d/TGI/Paris/2019/U7B6A7E5356C58F4136C7 [https://perma.cc/D57V-N4ZZ]. Additionally, the Court of Justice of the European Union ruled that the resale of digital software licenses, even ones downloaded from the internet, is permissible. Id.
Bill Rosenblatt, For Digital First Sale, It’s Still 2001, Copyright & Tech. (Dec. 16, 2018), https://copyrightandtechnology.com/2018/12/16/for-digital-first-sale-its-still-2001/ [https://perma.cc/5UTF-HXK7].
Capitol is a record label known for recording well-known “classic vinyls [like] Frank Sinatra’s ‘Come Fly With Me’ and The Beatles’ ‘Yellow Submarine.’” Capitol Records, LLC v. ReDigi Inc., 934 F. Supp. 2d 640, 644–45 (S.D.N.Y. 2013).
Id. at 645.
ReDigi offered a marketplace that allowed the purchase of digital music at a “fraction of the price” that could be found on the iTunes store. Id.
Id. at 648.
Id. at 651.
Id. at 655–56 (“While this limitation clearly presents obstacles to resale that are different from, and perhaps even more onerous than, those involved in the resale of CDs and cassettes, the limitation is hardly absurd—the first sale doctrine was enacted in a world where the ease and speed of data transfer could not have been imagined.”).
Id. at 660.
Capitol Records, LLC v. ReDigi Inc., 910 F.3d 649, 651 (2d Cir. 2018).
Id. at 652.
Id. at 652 n.3.
Rosenblatt, supra note 30; see infra note 70.
ReDigi, 910 F.3d at 652, 659 (“Furthermore, other technology may exist or be developed that could lawfully effectuate a digital first sale.”).
17 U.S.C. § 106.
Capitol Records, LLC v. ReDigi Inc., 934 F. Supp. 2d 640, 649 (S.D.N.Y. 2013).
17 U.S.C. § 109(a).
ReDigi, 910 F.3d at 656.
Id. at 657.
Id. (“At each of these steps, the digital file is fixed in a new material object ‘for a period of more than transitory duration.’” (quoting Cartoon Network LP v CSC Holdings, Inc., 536 F.3d 121, 127 (2d Cir. 2008))).
Id. at 656.
Id. at 658.
Id. at 654.
Id. at 652.
Id. at 654.
Id. at 654 n.6 (describing how users could delete Music Manager after their digital music files are sold, then redownload the same files to their computer for free from the Apple iCloud).
Id. at 654.
See infra notes 151–54 and accompanying text.
ReDigi, 910 F.3d at 662.
Id. at 662–63.
See Laura Sydell, How Long Do CDs Last? It Depends, but Definitely Not Forever, NPR (Aug. 18, 2014, 5:21 PM), https://www.npr.org/sections/alltechconsidered/2014/08/18/340716269/how-long-do-cds-last-it-depends-but-definitely-not-forever [https://perma.cc/CR8N-SY8J].
Pech, supra note 27, at 41.
ReDigi, 910 F.3d at 662–63; Pech, supra note 27, at 41.
Damien Riehl & Jumi Kassim, Is “Buying” Digital Content Just “Renting” for Life? Contemplating A Digital First-Sale Doctrine, 40 Wm. Mitchell L. Rev. 783, 792 (2014) (describing the difficulties of applying analog content rules to digital content); U.S. Copyright Off., Libr. of Cong., Digital Millennium Copyright Act Section 104 Report 78, 82–83 (2001) [hereinafter DMCA Report 2001].
Riehl & Kassim, supra note 70, at 792; DMCA Report 2001, supra note 70, at 82 (“Time, space, effort and cost no longer act as barriers to the movement of copies, since digital copies can be transmitted nearly instantaneously anywhere in the world with minimal effort and negligible cost.”).
Riehl & Kassim, supra note 70.
DMCA Report 2001, supra note 70, at 82–83.
17 U.S.C. §§ 106, 109(a).
17 U.S.C. § 109(a).
Capitol Records, LLC v. ReDigi Inc., 910 F.3d 649, 656. (2d Cir. 2018).
Id. at 657 (“[T]he creation of such new phonorecords involves unauthorized reproduction, which is not protected, or even addressed, by [17 U.S.C.] § 109(a).”).
Id. at 659.
Id. at 660.
Id. at 659.
See DMCA Report 2001, supra note 70, at xxi.
ReDigi, 910 F.3d at 652.
Brief for American Library Ass’n, et al. as Amici Curiae Supporting Defendants-Appellants at 4, ReDigi, 910 F.3d 649 (No. 16-2321); Brief for Copyright Law Scholars as Amici Curiae Supporting Defendants-Appellants at 15–17, ReDigi, 910 F.3d 649 (No. 16-2321).
Brief for Copyright Law Scholars, supra note 85, at 4 (“Every time someone donates a book to a school library or wills their record collection to their children, the first sale doctrine is silently working to facilitate the transaction without legal complexity or obstruction.”).
ReDigi, 910 F.3d at 664 (“The copyright statute is a patchwork, sometimes varying from clause to clause, as between provisions for which Congress has taken control . . . .”).
S. Rep. No. 105-190, at 1–2 (1998).
DMCA Report 2001, supra note 70, at xviii.
See Victor F. Calaba, Quibbles 'N Bits: Making a Digital First Sale Doctrine Feasible, 9 Mich. Telecomm. & Tech. L. Rev. 1, 19–21 (2002).
DMCA Report 2001, supra note 70, at xviii–xix.
Id. at xix.
R. Anthony Reese, The First Sale Doctrine in the Era of Digital Networks, 44 B.C. L. Rev. 577, 583 (2003).
DMCA Report 2001, supra note 70, at xix.
Id. at 80.
Perzanowski & Schultz, supra note 25, at 903.
Id. at 903–04.
Adam Hayes, Blockchain Facts: What Is It, How It Works, and How It Can Be Used, Investopedia, https://www.investopedia.com/terms/b/blockchain.asp [https://perma.cc/R36B-GG8B] (June 24, 2022).
Satoshi Nakamoto is a pseudonym, and his, her, or their true identity is still a mystery. See Who Is Satoshi Nakamoto?, CoinDesk, https://www.coindesk.com/learn/who-is-satoshi-nakamoto/ [https://perma.cc/9FYK-GCNX] (Aug. 5, 2022, 12:01 PM). However, the plaintiff in a current case in a Florida district court states claims that Dave Kleiman and Craig Wright comprise the true identity of Satoshi Nakamoto. Kleiman v. Wright, No. 9:18-cv-80176, slip op. at 3 (S.D. Fla. Sept. 21, 2020).
Cryptocurrencies are digital currencies that utilize a decentralized system like a blockchain. Omri Marian, A Conceptual Framework for the Regulation of Cryptocurrencies, 82 U. Chi. L. Rev. Dialogue 53, 54–55 (2015). Bitcoin is a type of cryptocurrency and is currently the biggest and most widely traded one in use. See Kate Cox, Bitcoin: What the Heck Is It, and How Does It Work?, Consumerist, http://consumerist.com/2014/03/04/bitcoin-what-the-heck-is-it-and-how-does-it-work [https://perma.cc/56JH-C4R7] (Mar. 4, 2014).
See Nakamoto, supra note 8 (providing a groundwork for cryptocurrency technology and making a case for a new online payment system).
Id. at 1, 8 (“We have proposed a system for electronic transactions without relying on trust. We started with the usual framework of coins made from digital signatures, which provides strong control of ownership, but is incomplete without a way to prevent double-spending.”).
What Is Blockchain Technology?, IBM, https://www.ibm.com/topics/what-is-blockchain [https://perma.cc/6QWY-MCDM] (last visited Sept. 8, 2022). An immutable record is one where the record cannot be tampered with after the transaction is recorded in the shared ledger. Id.
Id. (“These blocks form a chain of data as an asset moves from place to place or ownership changes hands. The blocks confirm the exact time and sequence of transactions, and the blocks link securely together to prevent any block from being altered or a block being inserted between two existing blocks.”).
For a basic understanding of blockchain, see Ali Dhanani & Ryan Dowell, Introduction to Blockchain Technologies and Smart Contracts, 57 Hous. Law., Nov–Dec. 2019, at 18–19.
Id. at 19.
Id. at 18–19.
Id. at 19.
Id. at 18.
Eddie Mitchell, How Many People Use Bitcoin?, Bitcoin Mkt. J. (Nov. 23, 2020, 8:00 AM), https://www.bitcoinmarketjournal.com/how-many-people-use-bitcoin/ [https://perma.cc/N776-9Y5L] (“One survey suggests that approximately 11 percent of Americans own bitcoin, meaning that some 30 million bitcoin owners are based in the States.”).
Dhanani & Dowell, supra note 106, at 19.
Id. (“The secure record of transactions itself supports the asset.”).
What Is a Crypto Wallet?, Coinbase, https://www.coinbase.com/learn/crypto-basics/what-is-a-crypto-wallet [https://perma.cc/3U5Q-MZAY] (last visited Sept. 30, 2022). Coinbase is a cryptocurrency trading platform that offers an app where users can buy and sell roughly fifty different cryptocurrencies. Todd Haselton, Here’s What Coinbase Is and How to Use It to Buy and Sell Cryptocurrencies, CNBC, https://www.cnbc.com/2021/04/14/what-is-coinbase-how-to-use-it.html [https://perma.cc/CZ4H-F2U2] (May 12, 2021, 5:04 PM) (“Coinbase shows you the current price and trends for cryptocurrencies, a look at your portfolio of holdings and news stories about the industry.”).
What Is a Crypto Wallet?, supra note 115 (describing the difference between the main Coinbase app where users buy and sell crypto and the Coinbase Wallet app where users store their private keys).
See Audrey Nesbitt, Blockchain Technology Revolutionizing the Art World Through Decentralized Finance Networks & NFTs, Medium (Dec. 10, 2020), https://medium.datadriveninvestor.com/blockchain-technology-revolutionizing-the-art-world-through-decentralized-finance-networks-nfts-63cd0ace9b82 [https://perma.cc/H7XL-27YL] (detailing how a new NFT platform, Ephimera, is allowing artists focused on photography and video art to publish and sell works as NFTs).
Robyn Conti & John Schmidt, What Is an NFT? Non-Fungible Tokens Explained, Forbes Advisor, https://www.forbes.com/advisor/investing/nft-non-fungible-token/ [https://perma.cc/FR4Q-48MD] (Apr. 8, 2022, 8:36 AM) (explaining what NFTs are, how they work, and how they differ from cryptocurrency); Anshika Bhalla, A Beginner’s Guide to Non-Fungible Tokens (NFT), Blockchain Couns. (Sept. 21, 2022), https://www.blockchain-council.org/blockchain/a-beginners-guide-to-non-fungible-tokens-nft/ [https://perma.cc/H77U-UCV5] (“This is in contrast to fungible currencies, such as bitcoins, which may be used as a means of exchange since they are interchangeable.”).
Conti & Schmidt, supra note 118 (explaining what NFTs are, how they work, and how they differ from cryptocurrency).
Simon J. Frankel & Billie Mandelbaum, What Copyright Lawyers Need to Know About NFTs, Bloomberg L. (July 16, 2021, 3:01 AM), https://news.bloomberglaw.com/ip-law/what-copyright-lawyers-need-to-know-about-nfts [https://perma.cc/W8EZ-F6GX].
Chris Butsch, What Is an NFT?—How Nyan Cat Was Sold for $600,000, Money Under 30, https://www.moneyunder30.com/what-is-an-nft [https://perma.cc/QSF8-7QVV] (June 1, 2022) (describing how NFTs have allowed internet images, memes, gifs, etc. to be ownable).
Nyan Cat is an 8-bit animation internet meme “depicting a cat with the body of a cherry Pop-Tart flying through outer space.” Nyan Cat, Know Your Meme, https://knowyourmeme.com/memes/nyan-cat [https://perma.cc/CM8J-2VPL] (last visited Sept. 30, 2022).
Butsch, supra note 121.
Id.; Bhalla, supra note 118.
Leighton Emmons, Why the Future of NFTs Goes Far Beyond Gaming and Digital Art Work, Nasdaq (Nov. 10, 2021, 1:34 PM), https://www.nasdaq.com/articles/why-the-future-of-nfts-goes-far-beyond-gaming-and-digital-art-work [https://perma.cc/ALR2-EYSB] (listing several future applications and areas where NFTs could change the landscape).
Id. (“Many students currently prefer to buy paper textbooks instead of digital ones. This is because the digital ones cannot be resold after a class ends.”).
Jeff Wilser, 15 NFT Use Cases That Could Go Mainstream, CoinDesk (Oct. 14, 2021, 11:52 AM), https://www.coindesk.com/business/2021/10/14/15-nft-use-cases-that-could-go-mainstream/ [https://perma.cc/J64C-V8CM].
Emmons, supra note 125.
Shaan Ray, NFTs and Smart Contracts, Medium (May 18, 2021), https://medium.com/lansaar/nfts-and-smart-contracts-6c4c5516d5a0 [https://perma.cc/EZD4-ACD9].
Id. First coined in 1994 by Nick Szabo, smart contracts are self-executing contracts. Jitendra Chittoda, Mastering Blockchain Programming with Solidity 37 (2019).
David M. Adlerstein, Are Smart Contracts Smart? A Critical Look at Basic Blockchain Questions, Coindesk (Sept. 11, 2021, 8:29 AM), https://www.coindesk.com/tech/2017/06/26/are-smart-contracts-smart-a-critical-look-at-basic-blockchain-questions/ [https://perma.cc/3YE9-UGQZ] (discussing how smart contracts are neither “smart” nor “contracts” in the traditional sense).
Ray, supra note 130 (detailing the two principal ways smart contracts and NFTs interact with one another).
For more examples on how smart contracts can be configured and used in the market, see What Is a Smart Contract and How Does It Work?, Cointelegraph, https://cointelegraph.com/ethereum-for-beginners/what-are-smart-contracts-a-beginners-guide-to-automated-agreements [https://perma.cc/V49B-JU8F] (last visited Mar. 20, 2022).
See Nesbitt, supra note 117.
See Charlotte Kent, Artists Have Been Attempting to Secure Royalties on Their Work for More than a Century. Blockchain Finally Offers Them a Breakthrough, artnet (Apr. 7, 2021), https://news.artnet.com/opinion/artists-blockchain-resale-royalties-1956903 [https://perma.cc/U2NB-HLZ4] (explaining the history of digital art sales and the implications blockchain may have on the industry); What Are Creator Royalties? How Do They Work?, GameStop Blockchain, https://support.blockchain.gamestop.com/hc/en-us/articles/4412929801875-What-are-Creator-Royalties-How-do-they-work-[https://perma.cc/BL76-32F] (last visited July 7, 2022) (describing how GameStop allows creators of an NFT to retain up to 10% on creator royalties whenever their NFT is traded).
See supra Section II.B.
Katherine Elizabeth Macdonald, Speed Bump on the Information Superhighway: Slowing Transmission of Digital Works to Protect Copyright Owners, 63 La. L. Rev. 411, 420 (2003).
Deborah Tussey, Technology Matters: The Courts, Media Neutrality, and New Technologies, 12 J. Intell. Prop. L. 427, 442–43 (2005); Monica L. Dobson, Comment, ReDigi and the Resale of Digital Media: The Courts Reject a Digital First Sale Doctrine and Sustain the Imbalance Between Copyright Owners and Consumers, 7 Akron Intell. Prop. J. 179, 202 (2015).
Tussey, supra note 141, at 428.
Alison E. Berman & Jason Dorrier, Technology Feels Like It’s Accelerating—Because It Actually Is, SingularityHub (Mar. 22, 2016), https://singularityhub.com/2016/03/22/technology-feels-like-its-accelerating-because-it-actually-is/ [https://perma.cc/H84R-W6YQ] (providing an answer to why technology seems to be progressing faster than ever and attributing it to Moore’s Law and the law of accelerating returns).
See infra Section IV.A.
See infra Section IV.B.
See infra Section IV.C.
See infra Section IV.D.
Capitol Records, LLC v. ReDigi Inc., 910 F.3d 649, 659 (2d Cir. 2018) (“[O]ther technology may exist or be developed that could lawfully effectuate a digital first sale.”). Some have theorized the ruling of ReDigi created a possibility of reselling music that is transferred directly to the cloud after first purchase. Soma & Kugler, supra note 21.
ReDigi, 910 F.3d at 655, 658–59.
Shaverdian, supra note 7. See generally Nakamoto, supra note 8.
Kevin V. Tu & Michael W. Meredith, Rethinking Virtual Currency Regulation in the Bitcoin Age, 90 Wash. L. Rev. 271, 280 (2015) (illustrating the history of the double-spending problem in relation to Bitcoin).
Doug Fredrick, Cryptocurrency and Blockchain: Here We Go Down the Rabbit Hole, 74 J. Mo. B. 294, 296 (2018); Nathan Reiff, How Does a Block Chain Prevent Double-Spending of Bitcoins?, Investopedia, https://www.investopedia.com/ask/answers/061915/how-does-block-chain-prevent-doublespending-bitcoins.asp [https://perma.cc/W4XX-YSUQ] (Aug. 26, 2021) (“[I]f you pay for a sandwich with a $10 bill, turning that bill over to the maker of the sandwich, you cannot turn around and spend that same $10 elsewhere. A transaction using a digital currency like bitcoin, however, occurs entirely digitally. This means that it is possible to copy the transaction details and rebroadcast it such that the same BTC could be spent multiple times by a single owner.”).
See Reiff, supra note 153.
Marc Andreessen, Why Bitcoin Matters, N.Y. Times (Jan. 21, 2014, 11:54 AM), https://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/ [https://perma.cc/9VJY-X757].
DMCA Report 2001, supra note 70, at xix; Capitol Records, LLC v. ReDigi Inc., 910 F.3d 649, 653, 657 (2d Cir. 2018).
See Paul Neufeld, Down the Rabbit Hole: Digital Assets in International Arbitration, JD Supra (Jan. 28, 2022), https://www.jdsupra.com/legalnews/down-the-rabbit-hole-digital-assets-in-6221005/ [https://perma.cc/6BKX-VJDH].
Ron Dreben & Amelia Pennington, Nonfungible Tokens and Copyright: Diligence Issues to Consider, JD Supra (Apr. 13, 2021), https://www.jdsupra.com/legalnews/nonfungible-tokens-and-copyright-3961333/ [https://perma.cc/JB3E-MGFZ] (providing an understanding of how copyright law may apply to new technologies such as NFTs in an ever-evolving market).
Id. (“[B]ecause the NFT represents ownership of a specific copy that is cryptographically linked to the NFT . . . that one copy can be resold over and over like a physical book.”); Dragan Boscovic, How Nonfungible Tokens Work and Where They Get Their Value—a Cryptocurrency Expert Explains NFTs, Conversation (Mar. 31, 2021, 8:16 AM), https://theconversation.com/how-nonfungible-tokens-work-and-where-they-get-their-value-a-cryptocurrency-expert-explains-nfts-157489 [https://perma.cc/LZ2D-LTWE].
Dreben & Pennington, supra note 159.
Boscovic, supra note 161.
Redbox Automated Retail, LLC v. Buena Vista Home Ent., 399 F. Supp. 3d 1018, 1033 (C.D. Cal. 2019) (“Here, no such physical object exists when a standalone code is transferred, or prior to the time that that code is redeemed and the copyrighted work is fixed onto the downloader’s physical hard drive. Restrictions on resales of digital codes do not, therefore, face the same first sale doctrine obstacles that would apply to similar restrictions on physical discs.”).
What Are Smart Contracts on Blockchain?, IBM, https://www.ibm.com/topics/smart-contracts [https://perma.cc/HZ37-ADDN] (last visited Feb. 5, 2022) (“Then the smart contract can be programmed by a developer – although increasingly, organizations that use blockchain for business provide templates, web interfaces, and other online tools to simplify structuring smart contracts.”).
Jake Frankenfield, Smart Contracts, Investopedia (May 26, 2021), https://www.investopedia.com/terms/s/smart-contracts.asp [https://perma.cc/66JT-QREX] (“A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code.”); Lucas Mearian, What’s a Smart Contract (and How Does It Work)?, Computerworld (July 29, 2019, 3:00 AM), https://www.computerworld.com/article/3412140/whats-a-smart-contract-and-how-does-it-work.html [https://perma.cc/3RYN-E9HX] (“[T]he rules in smart contracts govern how tokens get allocated and define the conditions of transfer.”).
Dreben & Pennington, supra note 159.
Kent, supra note 138.
See Kimberly A. Condoulis, Note, Let Me Sell My Song! The Need for a Digital First Sale Doctrine Amendment to the Copyright Act, 22 B.U. J. Sci. & Tech. L. 121, 137–38 (2016) (noting how “[c]reative works [such as books, songs, and films] sometimes need a secondary market to stay alive” and how a secondary market for used digital copies can be “essential to avoid the cultural loss that comes with the disappearance of creative works”).
Daley, infra note 189.
Samantha Hissong, A Field Guide to Music’s Potential Crypto Boom, Rolling Stone (Feb. 4, 2021), https://www.rollingstone.com/pro/features/music-crypto-blockchain-nfts-guide-1116327/ [https://perma.cc/N382-XFTA].
Elena Zavelev, How Blockchain Empowers the Digital Art Market, Forbes (Nov. 7, 2018, 11:34 AM), https://www.forbes.com/sites/elenazavelev/2018/11/07/how-blockchain-empowers-the-digital-art-market [https://perma.cc/SHL7-UQNC].
Explore Art, OpenSea, https://opensea.io/collection/art [https://perma.cc/9W7M-QJSW] (last visited Feb. 4, 2022) (offering a service where creators can sell verified, immutable works via a digital ecosystem).
Sean Moore, GameStop Releases Public Beta NFT Marketplace, CoinTelegraph (July 12, 2022), https://cointelegraph.com/news/gamestop-releases-public-beta-nft-marketplace [https://perma.cc/GS3A-X5D2] (explaining that though GameStop’s launch is only a public beta version, 236 NFT collections are already in the marketplace).
Zavelev, supra note 175.
Oliver Carding, How Blockchain Is Changing the Rules of the Game, Coinjournal, https://coinjournal.net/news/how-blockchain-is-changing-the-rules-of-the-game/ [https://perma.cc/UA2L-CD6W] (May 22, 2020).
See Sell Xbox Accounts Today, Player Auctions, https://www.playerauctions.com/sell-xbox-live-account/ [https://perma.cc/J4KS-C6UC] (last visited Feb. 5, 2022) (providing a marketplace where customers can sell their Xbox live accounts for increasing money based on their membership level, achievements, and high scores).
Id. (advertising 100% protection against buyer payment fraud).
See How to Pay with Crypto-Currency, Player Auctions, https://support.playerauctions.com/hc/en-us/articles/360034263533-How-to-Pay-with-Crypto-Currency [https://perma.cc/755F-9R6Z] (last visited Sept. 11, 2022) (providing the option for customers to pay for profiles with cryptocurrency).
See Crypto Games—Exploring Play-to-Earn and GameFi, Moralis Academy, https://academy.moralis.io/blog/crypto-games-exploring-play-to-earn-and-gamefi [https://perma.cc/W69G-XUFM] (last visited Feb. 5, 2022) (accounting for how blockchain technology is disrupting and revolutionizing the traditional gaming industry).
Bill Rosenblatt, The Short, Unhappy Life of Music Downloads, Forbes (May 7, 2018, 4:17 PM), https://www.forbes.com/sites/billrosenblatt/2018/05/07/the-short-unhappy-life-of-music-downloads/?sh=529214327e76 [https://perma.cc/Q8L3-4D5H].
Sam Daley, 15 Companies Utilizing Blockchain in Music to Reshape a Changing Industry, Builtin, https://builtin.com/blockchain/blockchain-music-innovation-examples [https://perma.cc/WD3V-WN4F] (June 29, 2022).
Daley, supra note 189.
Id. (explaining how recognizable artists, such as Lupe Fiasco, Gramatik, and Pitbull, are pushing for decentralizing music); Perzanowski & Schultz, supra note 25, at 904 (“Without secondary markets, there is neither downward pressure on price nor an unlicensed rental market.”).
See DMCA Report 2001, supra note 70, at 102.
Daniel A. Gross, The Surprisingly Big Business of Library E-Books, New Yorker (Sept. 2, 2021), https://www.newyorker.com/news/annals-of-communications/an-app-called-libby-and-the-surprisingly-big-business-of-library-e-books [https://perma.cc/GD72-DSQ6]. For more on ways to address library issues related to a digital first sale, see DMCA Report 2001, supra note 70, at 102–05.
Hirsh & Alman, supra note 132.
Gross, supra note 194.
Id. (“In the first days of the lockdown, the N.Y.P.L. experienced a spike in downloads, which lengthened the wait times for popular books. In response, it limited readers to three checkouts and three waitlist requests at a time, and it shifted almost all of its multimillion-dollar acquisitions budget to digital content.”).
Robin Burks, Valve Might Have to Let Steam Users Resell Games (in France), Screen Rant (Sept. 20, 2019), https://screenrant.com/valve-steam-resell-games-france-appeal/ [https://perma.cc/ZVT2-6EZ8].
Id.; see also Valve Corporation, Bus. Model Navigator, https://businessmodelnavigator.com/case-firm?id=104 [https://perma.cc/298B-3SMW] (last visited Oct. 1, 2022).
See Cory Doctorow, In Serving Big Company Interests, Copyright Is in Crisis, Elec. Frontier Found. (Jan. 21, 2020), https://www.eff.org/deeplinks/2020/01/serving-big-company-interests-copyright-crisis [https://perma.cc/EL9N-RBAY].
Amy X. Wang, How Musicians Make Money—or Don’t at All—in 2018, Rolling Stone (Aug. 8, 2018, 10:21 AM), https://www.rollingstone.com/pro/features/how-musicians-make-money-or-dont-at-all-in-2018-706745/ [https://perma.cc/WH2A-VMZB].
Carly A. Kessler, NFTs Are Reshaping Artists’ IP Rights, Bloomberg L. (Mar. 24, 2021, 3:00 AM), https://news.bloomberglaw.com/ip-law/nfts-are-reshaping-artists-ip-rights [https://perma.cc/2QUD-7CWV] (explaining how NFTs are interacting with copyright law and reshaping royalties for artists).
Hissong, supra note 172.
Id. (“Why would a music company want to pay somebody every single day when, if they can hold onto the money for six months at a time, they can earn interest on that money?”); Royalties, Spotify for Artists, https://artists.spotify.com/help/article/royalties [https://perma.cc/C9SY-D4QJ] (last visited Feb. 5, 2022) (explaining that artists typically receive royalty payments once a month, but ultimately it depends on the artist’s agreement with their record label or distributor).
Hissong, supra note 172.
Kessler, supra note 205.
Pech, supra note 27, at 38.
Shaverdian, supra note 7.
Lisa M. Tittemore, NFTs—A Novel Challenge for Traders, Investors and Copyright Lawyers, Sunstein (May 5, 2021), https://www.sunsteinlaw.com/publications/nfts-a-novel-challenge-for-traders-investors-and-copyright-lawyers [https://perma.cc/2NHJ-BS4F].
Kent, supra note 138.
Kessler, supra note 205; Tom Kulik, Why BlockChain Is No Panacea for the Digital First Sale Doctrine (for Now), Above the Law (Sept. 25, 2018, 11:38 AM), https://abovethelaw.com/2018/09/why-blockchain-is-no-panacea-for-the-digital-first-sale-doctrine-for-now/ [https://perma.cc/B9LC-6YXG] (“Further, blockchain/DLT can provide a mechanism for tracking the chain of title that can significantly reduce (or even ostensibly eliminate) orphan works (i.e., works remaining subject to copyright but [where] the owner is either unknown or cannot be located.”).
Pech, supra note 27, at 39.